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Boyd Gaming reaffirms interest in acquiring Station Casinos assets

Company reports it narrowed its losses in the fourth quarter

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Sun File Photo

Vehicles come and go from the front entrance of the Suncoast Casino, owned by Boyd Gaming.

Updated Tuesday, March 2, 2010 | noon

Boyd Gaming Financial Information

  4Q 2009 4Q 2008 % Change 3Q 2009
Revenue $384.9 million $422.6 million -9% $398.2 million
Net income ($1 million) ($220.8 million) N/A $6.3 million
Net income per share (1 cent) ($2.51) N/A 7 cents

Boyd Gaming Corp. of Las Vegas narrowed its fourth quarter loss even as revenue fell across the board as the slow economy reduced spending at its hotels and casinos around the country.

Boyd said today it lost $1 million, or 1 cent per share, during the fourth quarter of 2009, compared to a loss in 2008's fourth quarter of $220.8 million, or $2.51 per share. Net revenue fell from $422.6 million to $384.9 million during the year-over-year period.

During a conference call with investors and analysts today, Boyd executives reaffirmed the company’s commitment to acquiring Station Casinos’ assets and discussed the company’s view of the current condition of the Las Vegas locals market.

“During the fourth quarter, the economy continued to be weak, unemployment remained high and consumers continued to be cautious with their discretionary spending,” Boyd Gaming President and CEO Keith Smith said. “Looking forward, however, we are seeing some signs that recovery is under way, despite the fact that the nation’s economic forecast remains uncertain.”

In Boyd’s locals segment, net revenue for the fourth quarter of 2009 was $155 million compared to $176.8 million during the same period of 2008. Earnings before interest, taxes, depreciation and amortization were $34.7 million, a 20.7 percent decrease from $43.8 million in the same quarter 2008.

Smith noted that such earnings in the locals market were up more than 10 percent from the third quarter -- the first sequential quarter-over-quarter increase in that market in 18 months.

Boyd Chief Operating Officer Paul Chakmak said the recent slight increase in visitors on the Strip has been beneficial to Boyd’s customers, many of whom are employed at businesses on the Strip.

“A significant portion of our customer base is tied either directly or indirectly to the economic vitality on the Strip. When the Strip regains its footing, the Las Vegas locals market will return as well,” Smith said.

In December, Boyd made an offer to purchase Station Casinos’ assets in an effort to expand its locals market. The offer was for $2.45 billion for the company’s 18 casinos and casino-hotels in Southern Nevada.

“This offer stands and we are actively pursuing these assets,” Smith said. “We believe we can offer the greatest possible value to the majority of Station’s creditors. There is no one who is in a better position to manage those assets properly.”

Smith noted that Station has asserted it might have an agreement with lenders related to four of its 18 properties (Red Rock Resort, Sunset Station, Boulder Station and Palace Station).

In the downtown Las Vegas market, Chakmak said visitation remained stable, but consumers continued to spend less.

Revenue fell to $58 million from $60.8 million during the year-over-year period. Earnings before interest, taxes, depreciation and amortization for the fourth quarter were $12.2 million, a 7.7 percent decrease from the $13.3 million reported in the fourth quarter of 2008.

In Boyd’s Midwest and Southern regions, revenue fell to $171.9 million from $185 million during the year-over-year period.

At its half-owned Borgata Hotel Casino & Spa in Atlantic City, revenue for the fourth quarter of 2009 was $175.4 million compared to $183.5 million during the same period of 2008. EBIDTA was flat at about $36 million for the quarter, but Chakmak said the company lost about $5 million because of winter storms on the East Coast.

The effect of weather already was felt during the first quarter of 2010 and Chakmak said the company expects that to be reflected in first quarter 2010 earnings.

Last month, MGM Mirage announced it was talking with its lenders and New Jersey regulators about putting its stake in the Borgata into a divestiture trust. New Jersey regulators have raised questions about Pansy Ho, MGM Mirage's joint venture partner in Macau.

“We hold a right of first refusal on any sale of MGM Mirage’s Borgata interest and we will monitor the divestiture process closely and act in the best interest of our company,” Smith said.

Smith said the company is still pleased with its 50 percent stake in the Borgata and it continues to be business as usual at the hotel-casino.

Sun reporter Steve Green contributed to this report.

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